Andrew Hauser: Thirteen days in October - how central bank balance sheets can support monetary and financial stability

Speech by Mr Andrew Hauser, Executive Director for Markets of the Bank of England, at the European Central Bank's 2022 Conference on Money Markets, Frankfurt am Main, 4 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

What a difference a month makes!

My original plan for this speech, back in early September, had been to talk through the Bank of England's plans for accelerating its unwind of Quantitative Easing (QE) by selling government bonds.

That story can still be told – because QE sales began, successfully, on 1 November.

But the tale also has a surprise new chapter – a programme of temporary and targeted asset purchases that ran for 13 days between 28 September and 14 October, aimed at heading off a clear and present threat to financial stability.

Switching so rapidly from planned sales, to purchases, and back to sales again might appear to some to imply a confusing or contradictory policy stance. But I want to show today how, through a combination of operational choices – clear communications, robust tool design, and following through on pre-commitments – it is possible to use the central bank balance sheet to support both monetary and financial stability, in ways that reinforce and complement, rather than undermine, either goal.

In my remaining remarks I will first describe the events that triggered our extraordinary intervention, and the ways in which we designed that intervention to maintain clear separation from the monetary stance – drawing on national and international thinking that has been underway since the 2020 'dash for cash'.